Government Treating RBI Like A ‘Chota’ Department, Says Chidambaram
Former finance minister describes demonetisation as a ‘monumental folly of one person’.
Former union finance minister P Chidambaram, questioned the government’s demonetisation exercise, saying none of the objectives laid out by the Prime Minister have been achieved so far. He also chose to take on the Modi administration, for treating the Reserve Bank of India like a “chota department”.
Demonetisation was brought in to combat black money, fake currency and corruption. However, even almost 70 days after the move was announced, none of the milestones have been achieved, Chidambaram said in his address at the Jan Vedna Sammelan, a conclave organised by the Indian National Congress.
According to him (Modi), on November 8, he killed black money, he killed corruption, and he killed fake currency. 70 days later, there should be no black money. 70 days later, nobody should give or take bribes. 70 days later, there should be no fake currency. I am asking the Prime Minister to put his promises to test.P Chidambaram At The Jan Vedna Sammelan
Chidambaram listed out cases of cash seizures across the country, that too in new Rs 2,000 banknotes, which he argued shows that demonetisation has not been able to curb the creation of black money.
In the last week, exactly seven days before today, Rs 7.6 lakh in new Rs 2,000 notes were seized in Kanpur. Is that black money or white money? Rs 8 lakh was seized in Ujjain. Is that black money or white money? Rs 10 lakh was seized in Meerut. Is that black money or white money? Rs 20 lakh was seized on the highway to Moradabad. Is that black money or white money?P Chidambaram At The Jan Vedna Sammelan
He added that one of the first cases of corruption with the new Rs 2,000 notes was reported at Kandla Port, in the Prime Minister's home state, Gujarat, where 124 notes were seized.
‘The Economic And Social Losses Are Enormous’
The cost of demonetisation, Chidambaram said, has been a loss of livelihood for 45 crore daily wage labourers in the country, and the small farmers who have been bearing the brunt of the cash crunch.
For a full 60 days, 45 crore people’s income is taken away. Who will compensate them? Farmers too. Look at the crashing prices. Potatoes, tomatoes, peas, cauliflowers, cabbages and orange prices have crashed. In Nagpur a ton of oranges were being sold for Rs 40,000 on November 7. On the day I visited Nagpur (after November 8), it was down to Rs 25,000 per ton. Who will compensate the farmers?P Chidambaram At The Jan Vedna Sammelan
Neither is the macro economic cost too small according to him.
In my humble view, the Gross Domestic Product will be hit by more than one percent. One percent decline in GDP means Rs 1.5 lakh crore lost to this country.P Chidambaram At The Jan Vedna Sammelan
He added that only the present finance minister, Arun Jaitley believes that the growth rate will not be affected by demonetisation.
Except the finance minister, nobody in the world says the GDP will not be hit. Even the RBI has said, GDP will come down from the original estimate of 7.6 percent to 7.1 percent.P Chidambaram At The Jan Vedna Sammelan
Government Treating RBI Like A ‘Chota Department’
His most scathing remark was on the present equation between the Reserve Bank of India and the government, saying the banking regulator was being treated like a ‘chota department’ of centre.
Referring to demonetisation as the “ monumental folly of one person”, Chidambaram slammed the manner in which the decision was taken.
It is now clear that the government of India wrote a letter to the RBI on November 7, asking the RBI to consider demonetisation. Instead of the RBI advising the government, it was the government that advised RBI to consider demonetisation. RBI called the meeting on November 8. I want to know when did the RBI issue notice to its directors? How much time was given to the directors to attend the meeting? There are 10 independent director positions in the RBI. In the last two and a half years, seven have been kept vacant. There are only three independent directors, one of them didn’t attend the meeting. The meeting lasted no more than 30 minutes. We asked for the agenda paper, RBI has not given it. We are asking for the minutes of the meeting, RBI does not give the minutes. RBI sends its recommendation, the cabinet is waiting. How does the cabinet know that the RBI will recommend demonetisation?P Chidambaram At The Jan Vedna Sammelan
The lack of any documented proof so far, according to Chidambaram, prompts one to question whether a Cabinet meet did take place on November 8.
A meeting is supposed to have taken place on November 8, but there is no record of a Cabinet meeting. Where is the Cabinet’s note? Where is the Cabinet decision? And the ministers were kept prisoners until the prime minister went on television and announced demonetisation.P Chidambaram At The Jan Vedna Sammelan